Ecommerce, the use of the Internet to conduct commercial transactions, is no longer a new concept. A vast number of websites now offer platforms for commercial activities between businesses (B2B), between businesses and consumers (B2C), and between consumers (C2C). While the internet provides a much wider medium for the pool of buyers and sellers and much easier ways of communication and financial transaction, the negotiation of the price is limited to traditional methods. Presently, there are mainly 3 ways of deciding the price for a certain goods or service during an internet transaction: seller's price, buyer's offer and auction based.
The first method is the most trivial, most conventional way to conduct sales. The seller names a price for the product or service offered, and the buyer decides whether to purchase at this price. The low-price search systems, such as www.pricegrabber.com, provides the buyers means to find the best offer over the internet for a sought-after item, but the overall pricing is still based on the sellers' offer.
The second method is when the buyer makes a price offer for the sought-after item and the offer is accepted or rejected by the provider(s). An example of this method is: www.priceline.com.
In the third method, online auction, the seller lists starting price for the product or service offered for a certain period of time, and the buyers compete with each other by bidding a higher price for the item. At the end of the auction, the highest bidder becomes the winner of the item. An example of this method would be www.ebay.com.
These three systems expose disadvantage in promptly and accurately deciding the market value of the product or service offered. The first method lacks flexibility. The price reflects more of the seller's will than the value of the item. Any changes in price have to be implemented manually to adjust to market demand, and the effectiveness of the price change can't be guaranteed. The second method consists of the same problem but in the opposite direction. The item seeker has to take guesses of the suppliers' will regarding the item. The third method, while usually ends up with the proper market value of the item, lacks flexibility in time. For example, an item seeker willing to make the highest price may not have access to internet at the end of the auction period for the said item and thus lose the auction. Further, the seller has to list the item for a set period of time for auction, during which the item may be viewed but bids seldom came. This time of showcasing the item does not bring the seller or the buyer any economic benefit but has negative implications in delays.
While some systems of ecommerce employ combinations of the above methods, but they do not solve the fundamental problems of each pricing system. A new, better method of price negotiation that fully employs the capacity of computer internet and suits the need of both buyers and sellers is needed.